If you are a first home buyer and you require a home loan, it is important to know how much deposit you will need so you can get started with establishing a suitable savings plan.

What does Genuine Savings mean?

Genuine savings is the savings required by you to purchase a property and get a home loan based on the purchase price. You must, however, be able to demonstrate to the lender/credit provider that you have genuinely saved/held or evidenced these savings via account statements over an established period (normally for 3 months).

Why are Genuine Savings required?

It is required by most lenders when the Loan to Value Ratio (LVR) is greater than 85% of the security value of your property require the borrower to show evidence of a regular savings over a period of 3 months.

What Sources can Genuine Savings come?

Where the Loan to Value Ratio (LVR) is greater than 85%, the minimum deposit can come from any of the following sources:

  • Personal Savings Accounts and or Term Deposit Accounts (held for at least 3 months)
  • Real Estate Equity held in an existing property
  • Share Certificates (held for at least 3 months)
  • Gift or Inheritance (held in the applicants account for at least 3 months)
  • Tax Refunds (confirmation via your Tax Assessment Notice showing that your refund has been deposited to a savings account)

Reminder: Lenders have their own set of rules when it comes to determining genuine savings. So, make sure you do your homework and explore all your options.

What Amount of Genuine Savings do I need?

The amount required to be contributed by you will depend on your following circumstances:

  • If you intend to purchase or build an owner occupied property, you will need to contribute 5% of the security value.
  • If you intend to purchase or build an investment property, you will need to contribute 10% of the security value.

What are unacceptable as Genuine Savings?

The following types of savings (or equity) are not an acceptable form:

  • First Home Owners Grant (FHOG)
  • Borrowed funds (for example a personal loan)
  • The sale of an asset other than a property (e.g. the sale of a motor vehicle)

Is my Rental History used as a substitute for Genuine Savings?

Yes, if you have less than 5% savings, some lenders will look at the following key points:

  • Are you able to confirm a minimum of 6 months satisfactory continuous rental history in your current rental property?
  • Is the property currently being rented by you being managed by a Licensed Property Manager/Real Estate Agent?
  • Credit Score

What if I do not have Genuine Savings?

Some Lenders understand that customers are not always able to demonstrate savings and will consider other forms of savings.  So, don’t worry if you don’t have any savings, contact a finance broker with wide experience of finding home loans without genuine savings.